Illinois lawmakers look to avoid FAA penalties amid jet fuel tax crackdown

SPRINGFIELD (Illinois News Network) — After years of noncompliance, Illinois lawmakers are moving forward with legislation that would require local taxes on jet fuel go to aviation-related projects, not into local coffers.

The bill has failed in previous years. If it becomes law, taxes on jet fuel would be sent back to local airports and aviation schools. Illinois and many home-rule municipalities, notably Chicago, taxed jet fuel and used it for non-aviation expenses. The Federal Aviation Administration said in 2015 that tax revenue from jet fuel, a cost commonly passed on to commercial airlines tickets, would have to be spent on airports or other aviation-related projects instead of schools or other places.

Sponsor Michael Zalewski (D-Riverside) explained what local governments would have to do to comply.

“Those municipalities would have to change their locally-imposed sales tax on jet fuel to make sure that the purpose of the benefit derived from sale of the fuel goes to airport-related purposes,” he said.

This means municipalities that have used their home-rule authority to tax jet fuel could see revenue losses in the coming years, something that concerned a handful of lawmakers.

Failure to comply with the FAA rule could cost the state tens of millions of dollars annually in FAA grants. The bill now awaits Senate consideration. This is where it failed the last time it was attempted to pass. As the three-year deadline approached, then-Gov. Bruce Rauner warned that the state risked nearly $200 million in federal grants in that year alone.

Illinois Department of Transportation officials say the state has yet to lose out on any grants due to non-compliance.

The measure passed and now awaits consideration in the Senate, where it failed last year.

Reporting by Cole Lauterbach

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